Federal regulators are reviewing a proposed merger between Charlotte-based Atrium Health and a major hospital system in the Midwest. Atrium announced May 11 it plans to combine with Advocate Aurora Health, another large system based in Illinois and Wisconsin. The move would double Atrium’s size, giving it roughly 150,000 employees across six states.
The hospital systems claim that, if approved, the merger would create the fifth-largest hospital system in the U.S. It would be headquartered in Charlotte and have hospitals and other health care sites across the Carolinas, Georgia, Illinois and Wisconsin. The new system would be called Advocate Health, but the Atrium name would continue to be used in the Charlotte region.
What does the proposed merger mean for health care prices?
It’s not clear. Normally, when two hospital systems in the same part of the country combine, health care prices increase for patients, according to many nationwide studies.
The situation with Atrium and Advocate Aurora is different, said Barak Richman, professor of law and business administration at Duke University.
“This is not two hospitals nearby merging together, but hospitals in different regions merging together,” Richman said. “That means that the immediate price effects are less certain.”
Hospital pricing is complicated and based on many different factors: regulations, what other hospitals in each market charge and negotiations with insurance companies. The merger, if approved, could give Atrium’s new system more leverage in negotiating with insurance companies, according to Richman. Richman said hospitals will likely try to charge as much as they can.
Will it affect jobs?
In announcing the merger, Atrium pledged the proposed new system would create “more than 20,000 new jobs” in the markets it would serve — but the details aren’t clear.
According to Richman, the merger could mean nurses and doctors lose some of their negotiating power when it comes to their pay. When hospital systems combine, there are fewer employers competing for the same workers, so systems don’t necessarily have to try to match other systems’ wages.
“The explanation is always, ‘We’re going to create jobs. We’re going to reduce duplicative expenses. We’re going to create not only more efficient care, but better care,’” Richman said. “These are empty promises. And they’re promises that, frankly, just are not borne out in retrospective studies.”
Why does the merger need to be reviewed by federal regulators?
This is normal, and the Federal Trade Commission reviews all big mergers. Regulators are essentially checking to see whether the proposed Atrium merger would violate federal antitrust laws. They will talk to different stakeholders, like other local hospital systems, about how this would affect their business and any other concerns.
Is the merger likely to get federal approval?
Yes, according to John McCracken, professor of health care management at the University of Texas at Dallas.
“You’ll get approval on that because they’re in different markets,” McCracken said.
Richman at Duke was less sure. He said the size of the merger alone means the FTC will look at it with more scrutiny.
How long does the federal review process take?
It depends. Atrium has said it's hoping for an answer by the end of the year, but experts said it could definitely take longer than that.
If the deal is approved and the hospital systems combine, McCracken said it can take even longer to work out all of the additional details. For example, he said, in Texas in 2013, Baylor Healthcare System merged with another system. That merging process is ongoing in 2022.
“They’ve tried to consolidate administrative offices, but nobody in Dallas wants to move to Temple, and the people in Temple don’t want to move to Dallas,” McCracken said. “(That’s) going to be true … for Atrium and Advocate in spades.”
